2022 (5) TMI 1166 - HC - Service Tax

Non-discharge of tax liability - Petitioner neither got service tax registration nor paid any service tax on the taxable consideration received - demand alongwith interest and penalty - HELD THAT - It transpires that adjudication with reference to evidence on record is required to be made as to whether the conduct of the Petitioner by not discharging its Service Tax liability is a pointer for invocation of jurisdiction under Section 73 of the Finance Act. It is also necessary for the appropriate authority on the basis of pleadings and material particulars available on record to decide whether there was justification in subjecting the assessee-petitioner to adjudication in view of existence of the circumstances spelt out in proviso to Section 73 of Chapter V of the Finance Act, 1994 so that extended period of limitation is attracted. In the considered view of this Court, these questions do require factual adjudication. Needless to note that plea of limitation is mixed question of fact and law. The appellate authority is vested with power to deal with both question of law as also fact. The Petitioner after arguing for some time sought for permission to withdraw the writ petition to avail alternative remedy of appeal as is available under Chapter-V of the Finance Act, 1994. This Court, therefore, declines to express its views on merit of the case. However, the Petitioner is at liberty to prefer appeal - Petition disposed off.

Summary

Issues:
Challenge to the competence of proceeding under Section 73 of the CGST Act - Quashing of Order-in-Original - Demand for Service Tax, interest, and penalties - Failure to take registration and discharge tax liability - Non-cooperation of the Petitioner during adjudication - Justification for invoking jurisdiction under Section 73 - Existence of circumstances for extended period of limitation - Interpretation of Section 174 of the CGST Act.

Analysis:
The Petitioner challenged the competence of the proceeding under Section 73 of the CGST Act, seeking to quash the Order-in-Original passed by the Additional Commissioner of Central Tax, GST and CX Commissionerate. The demand raised included Service Tax, interest, and various penalties for failure to take registration and discharge tax liability. The Petitioner, engaged in transportation services, did not participate effectively during the adjudication process, leading to the confirmation of the demand by the Adjudicating Authority.

The Court noted that factual adjudication was necessary to determine if the Petitioner's conduct justified invoking jurisdiction under Section 73 of the Finance Act. It was crucial to establish if circumstances existed to attract the extended period of limitation. The Court emphasized that the plea of limitation involved a mix of fact and law, with the appellate authority empowered to address both. The Petitioner also raised a question regarding the applicability of Section 174 of the CGST Act to save the initiation of proceedings under Section 73.

Ultimately, the Petitioner requested to withdraw the writ petition to pursue the alternative remedy of appeal available under the Finance Act. The Court declined to express views on the case's merits, allowing the Petitioner to file an appeal. The writ petition was disposed of with these observations, leaving the Petitioner free to pursue the appellate route for further redressal.